I expected the continued pullback in gold, but it was magnified in a couple of stocks when their earnings reports didn't meet with the market's desires, says Jack Adamo. Here, the editor of Insiders Plus updates two of his recommended gold holdings.

Goldcorp (GG) had a good quarter despite a 6.6% drop in revenues, mostly due to a 20% lower contribution from its direct mining operations.

The shortfall was more than offset by a significant decrease in expenses and higher contributions from joint ventures and earnings from associated companies (that is, companies in which it has a participating, but not-controlling, interest).

Pre-tax earnings tripled from $40 to $122 million. Net EPS came in at 20¢ vs 10¢ last year. Operating cash flow of $227 million was 33% higher than net earnings and nearly 4-times last year's OCF. Despite the good numbers, Goldcorp's stock got beaten up along with everything else gold-related.

The stock is still expensive on a P/E basis. Analysts expect 35¢/share this year and 51¢ next year, so that's about 40-times this year's expected earnings (adjusted) and 28-times next year's.

The GAAP earnings P/E is probably higher. On the other hand, the earnings growth rate is 43%, so on a price/earnings-to-growth ratio basis, the stock is cheap, if it can keep up that growth rate for a few years.

There are a lot of moving parts in those growth numbers. We don't know what the price of gold will be, and production, as well as ore grades are always lumpy.

However, you probably wouldn't be reading this if you, like me, and -- more importantly -- like Jim Rogers, didn't expect gold to be noticeably higher in a few years.

Goldcorp is on track to take great advantage of that if it occurs and should do reasonably well even if it doesn't. GG is a buy at current prices.

Likewise, New Gold (NGD) took a hit of 11.5% despite a 40% increase in EPS to 7¢/share. As is often the case, investors' reaction was colored more by sentiment for the sector at the time of the news release than it was by the company-specific results.

Although the Rainy River mine remains on schedule and on budget, pundits focused on the company's light cash position after accounting for the needed $389 million of remaining capex to bring the mine into production this November.

With $350 million in cash and $177 million of undrawn capacity on its credit facility, the financing is a little tight, but not extremely so.

Any significant problems could cause the company to have to look for funds again, however, with the project so near to completion, I think it's virtually impossible New Gold would have any trouble getting bridge financing to complete it.

Like Goldcorp, New Gold is expensive on a current P/E basis, but its prospects look outstanding and its PEG ratio low. New Gold, Inc. is a buy at current prices.

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